A member of the Bush administration today talked about the proposed privatization of the giant Japanese postal life insurance system during a speech on the U.S.-Japan economic relationship.

The American Council of Life Insurers, Washington, and other U.S. and European insurance groups have been working with Japanese insurance groups to try to persuade the Japanese government to turn the postal life business into an ordinary company that will have to follow the same rules that apply to private life insurers.

“Since Japan Post operates the world’s largest savings and life insurance operations, postal privatization will have an enormous impact on the Japanese economy — and the manner in which this process unfolds is critical,” Robert Kimmitt, deputy secretary in the Treasury Department, said during an address in Washington at a gathering organized by the Maureen and Mike Mansfield Foundation, Washington, according to a written version of his remarks.

“In making this transition, it is important that Japan establish a level playing field for the privatized postal financial institutions before they introduce new products so that private sector firms from all countries can compete fairly,” Kimmitt said.

The privatization of the Japanese postal life insurance system is part of a broader Japanese initiative to streamline or privatize a number of Japanese government financial institutions, Kimmitt said.

In the long run, “reduction of the government’s role in financial intermediation is … critical for more efficient and competitive Japanese financial markets,” Kimmitt said.

Japan also needs to make it easier for workers to change jobs, and to continue work already under way to strengthen regulation of its financial markets, Kimmitt said.